The BlackRock coal antitrust lawsuit is a federal case brought in November 2024 by thirteen Republican state attorneys general accusing BlackRock, State Street, and Vanguard — the three largest asset managers in the world — of using their combined shareholdings in publicly traded coal producers to pressure those companies into cutting output and driving up energy prices. The case, Texas et al. v. BlackRock et al., is pending in the U.S. District Court for the Eastern District of Texas. Vanguard settled in February 2026 for $29.5 million. BlackRock and State Street are still fighting.
What the States Are Alleging
Texas Attorney General Ken Paxton led the coalition, joined by attorneys general from Alabama, Arkansas, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, Oklahoma, West Virginia, and Wyoming. The complaint rests on two federal antitrust theories. Under Section 7 of the Clayton Act, the states argue the firms acquired stock in competing coal producers and then used those holdings to lessen competition. Under Section 1 of the Sherman Act, the states allege the three firms agreed among themselves to suppress coal output. Certain states also brought consumer protection claims accusing BlackRock of marketing funds as non-ESG while using those funds’ voting power to pursue environmental goals.1National Association of Attorneys General. Texas et al. v. BlackRock et al.
The alleged mechanism runs through two climate-focused organizations: Climate Action 100+ and the Net Zero Asset Managers initiative. According to the complaint, the three firms joined those groups, made parallel public commitments to decarbonization, engaged directly with coal company management to push strategic changes, aligned their proxy votes on environmental disclosure proposals, and pressured coal companies to publish “Scope 3” emissions data that would effectively reveal competitors’ future production plans.2Harvard Law School Forum on Corporate Governance. Shareholder Engagement Considerations in Light of Texas v. BlackRock The states say the result was an unlawful exchange of competitively sensitive information that pushed the entire industry to cut production and raised prices for consumers.3Texas Attorney General. Attorney General Ken Paxton Scores Major Win to Hold BlackRock, State Street, and Vanguard Accountable
The theory borrows from academic work on “common ownership” or “horizontal shareholding” — the idea that when the same institutional investors hold large stakes in competing firms, those firms have weaker incentives to compete. The research remains contested, and the lawsuit effectively asks a federal court to apply the concept in a real enforcement action for the first time.
The August 2025 Ruling
On August 1, 2025, U.S. District Judge Jeremy Kernodle largely denied the defendants’ motions to dismiss. The federal antitrust claims under the Clayton Act and Sherman Act (Counts I through XVII) survived, as did one state antitrust claim (Count XXI).4Texas Attorney General. Memorandum Opinion and Order, Texas v. BlackRock
Two parts of the ruling matter most. First, Judge Kernodle rejected the defendants’ argument that they qualified for the Clayton Act’s “passive investor” safe harbor. Investors who use their shares through proxy voting or direct engagement to attempt to lessen competition, the court held, cannot claim the exemption designed for genuinely passive stockholders.4Texas Attorney General. Memorandum Opinion and Order, Texas v. BlackRock Second, the court found the conspiracy allegations plausible, pointing to the firms’ overlapping timelines for joining climate initiatives, parallel public commitments, coordinated engagement with coal company management, and aligned proxy voting as “plus factors” supporting an inference of agreement.2Harvard Law School Forum on Corporate Governance. Shareholder Engagement Considerations in Light of Texas v. BlackRock
The judge called that determination a “close call.” He was careful to say he was not finding that the firms actually conspired, only that the allegations were sufficient at the pleading stage. The states “lack direct evidence of a conspiracy” and “may ultimately be unable to prove their claim,” the opinion noted.5Berman Tabacco. Federal Judge Allows Multi-State Antitrust Action to Proceed Against BlackRock, Vanguard, and State Street
The court accepted, for pleading purposes, the states’ allegations that between 2019 and 2022 coal companies in relevant markets decreased output by roughly 18 to 19 percent while prices rose by 21 to 25 percent. Several consumer protection claims (Counts XVIII through XX) were dismissed, including claims under Louisiana and Nebraska law. The court sustained more limited consumer protection claims against BlackRock under Texas, Montana, Iowa, and Nebraska law, tied to allegations that BlackRock marketed certain funds as not following ESG strategies while using those funds’ shares to pursue environmental objectives.4Texas Attorney General. Memorandum Opinion and Order, Texas v. BlackRock
The DOJ and FTC Weigh In
On May 22, 2025, the U.S. Department of Justice and the Federal Trade Commission filed a joint statement of interest siding with the states. It was the first time the two agencies had addressed the antitrust implications of common shareholdings in federal court.6U.S. Department of Justice. Justice Department and Federal Trade Commission File Statement of Interest on Anticompetitive Uses of Common Ownership The filing argued that asset managers are “subject to the same antitrust laws as everyone else” and that public climate initiatives do not immunize coordinated conduct from antitrust scrutiny.7Federal Trade Commission. FTC, DOJ File Statement of Interest in Energy Collusion Case Against BlackRock, State Street, Vanguard Assistant Attorney General Abigail Slater said the DOJ “will not hesitate to stand up against powerful financial firms that use Americans’ retirement savings to harm competition under the guise of ESG.”
The agencies drew an important distinction. They declined to endorse the broader academic theory that simply holding minority stakes in competitors inherently reduces competition, reaffirming a 2017 position that blanket restrictions on institutional cross-holdings could create “unintended real-world costs on businesses and consumers by making it more difficult to diversify risk.”8Stinson LLP. FTC and DOJ Provide Critical Clarity on Passive Investment Rules Under Antitrust Law Instead, the filing focused narrowly on what the agencies characterized as active conduct — pushing for specific output reductions and coordinating across competing firms — that would forfeit the passive investor exemption.
Vanguard’s $29.5 Million Settlement
On February 26, 2026, Vanguard became the first defendant to settle, agreeing to pay $29.5 million to the plaintiff states.9Reuters. Vanguard Says It Settles Litigation Filed by Texas Attorney General, Other States Vanguard denied all wrongdoing and admitted no liability.10Harvard Law School Forum on Corporate Governance. Fiduciary Stewardship, Systemic Risk, and Democratic Authority: A Critique of the Paxton-Vanguard Settlement
The operational terms reached well beyond the payment. For five years, Vanguard accepted “strict passivity commitments,” including prohibitions on directing portfolio companies’ business strategies, threatening to withdraw holdings to influence corporate behavior, nominating directors at portfolio companies, and submitting shareholder proposals on environmental or social issues.11Texas Attorney General. Attorney General Paxton Secures Historic, Industry-Changing Agreement with Vanguard to Protect Coal Industry Vanguard also committed to focusing its stewardship activities solely on the financial interests of investors and to withdrawing from several climate-focused organizations, including PRI, NZAM, Ceres, and Climate Action 100+.12NYU Stern Center for Business and Human Rights. Vanguard Settles on ESG; BlackRock and State Street Fight On The company additionally agreed to expand a program letting fund investors direct how Vanguard casts proxy votes on their behalf, covering at least 50 percent of assets in U.S. equity funds.
Paxton called the agreement “historic” and “industry-changing.” Critics questioned whether a state enforcement action had effectively reshaped how a major asset manager conducts investor stewardship without any judicial finding that the law had been broken.10Harvard Law School Forum on Corporate Governance. Fiduciary Stewardship, Systemic Risk, and Democratic Authority: A Critique of the Paxton-Vanguard Settlement
How BlackRock and State Street Are Responding
BlackRock has called the lawsuit “baseless” and described the states’ theory — that coal companies conspired with their own shareholders to reduce production — as “absurd.” In its May 2025 statement responding to the federal filing, BlackRock argued that forcing asset managers to divest from coal companies would actually harm those companies’ access to capital and could raise energy costs, the opposite of what the plaintiffs claim to want. The firm added that the federal involvement “undermines the Trump Administration’s goal of American energy independence.”13BlackRock. BlackRock’s Response to DOJ and FTC Filing
While fighting the litigation, BlackRock has changed its public posture on climate. It withdrew from the Net Zero Asset Managers initiative in January 2025, stating in a client letter that its membership “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.”14Sustainability Magazine. BlackRock Exit Net Zero Asset Managers, Suspends Activities It had already downgraded participation in Climate Action 100+ in early 2024.15NYU Stern Center for Business and Human Rights. Big Banks and Asset Managers Abandon the Goal of Net Zero Carbon Emissions CEO Larry Fink’s 2025 annual letter to investors dropped all references to ESG, sustainability, climate change, and DEI.16Forbes. In Annual Letter, BlackRock’s Larry Fink Omits Climate Change, DEI, and ESG In the 2025 proxy season, BlackRock supported less than two percent of climate and natural capital shareholder proposals.17Financial Times. Asset Managers Withdraw From Climate Initiatives
State Street has taken a similar posture, characterizing the claims as baseless and preparing for extended litigation alongside BlackRock.9Reuters. Vanguard Says It Settles Litigation Filed by Texas Attorney General, Other States
Where the Case Stands
As of mid-2026, the multistate antitrust case is proceeding against BlackRock and State Street. Vanguard’s claims were dismissed with prejudice following the February 2026 settlement. On March 16, 2026, BlackRock and State Street filed a motion for partial judgment on the pleadings; the plaintiffs responded on April 13, 2026. No trial date has been set.18Sabin Center for Climate Change Law. Texas v. BlackRock, Inc. – Docket